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San Francisco Chronicle: For a 2nd time, San Francisco tries new way to fund home solar

May 12, 2015

Five years ago, San Francisco launched an unusual way for homeowners to afford solar panels — only to put the program on hold after federal regulators objected.

Now it’s back. And this time, it’s helping deal with the drought as well.

GreenFinanceSF will help residents and business owners pay for solar arrays as well as energy-efficiency upgrades to their buildings. In an added twist, the program will now finance water-saving home renovation projects as well, such as installing systems to collect gray water from bathroom sinks and showers.

GreenFinanceSF uses a form of financing known as Property Assessed Clean Energy, or PACE, that was born in Berkeley in 2008 and soon spread nationwide. PACE programs let property owners borrow money for home efficiency or solar projects, repaying the money as a line item on their property taxes. The up-front cash for the projects typically comes from bonds issued by the organization or government agency running the program.

Solar panels seen on the roof of a Twin Peaks home in San Francisco, Calif., on Thursday, December 4, 2014. San Francisco may soon pass a program that will give city homeowners and businesses a creative way to finance the installation of solar panels as well as water and energy efficient projects. New California proposal: Use less electricity, pay more Cambrian systems operator Andrew Goodman tests waste water samples from the new system that will clean up the waste water from the Lagunitas Brewing Company brewing process and generate electricity in Petaluma, California, on Tuesday, April 14, 2015. ‘Water tech’ finally ready to rise amid California’s drought California has become the first state to get 5 percent of its electricity from large-scale solar facilities, such as the Ivanpah solar power plant in the Mojave Desert. (AP Photo/Chris Carlson) California first state to get 5 percent of electricity from solar Climate deal shines sun on Bay Area solarSan Francisco residents interested in PACE will have a choice. The city’s Board of Supervisors in December authorized three organizations to offer PACE financing in the city: AllianceNRG, CaliforniaFIRST and Hero. Both Hero and CaliforniaFIRST are now up and running in the city. Residents can apply via the GreenFinanceSF webpage, athttp://sfenvironment.org/residentialpace.

“Many, many people, could save money overall by making an energy improvement or putting in solar, but that up-front cost has been a huge hurdle,” said Cisco DeVries, who created Berkeley’s pioneering PACE program. DeVries is now CEO of Renewable Funding, a company that runs the CaliforniaFIRST program on behalf of its member cities and counties.

While the PACE idea proved popular after debuting in Berkeley, it quickly ran into an unexpected source of opposition — the federal government.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, feared that PACE could be a problem should a large number of participating homes plunge into foreclosure. PACE loans attach to the properties as liens, and the agency complained that those liens would take priority over mortgage holders in case of foreclosure.

The agency advised Fannie Mae and Freddie Mac not to purchase mortgages on PACE properties. While some PACE programs tailored specifically to commercial properties continued, most residential programs — including San Francisco’s — stopped.

The housing agency’s decision, however, provoked a backlash from state and local governments. And in 2013, California created a $10 million fund designed to address federal concerns. If banks foreclose on a home with a PACE lien, the fund will cover any of Fannie Mae’s or Freddie Mac’s losses attributable to that lien.

While the Federal Housing Finance Agency still hasn’t fully embraced PACE financing, it has not tried to block CaliforniaFIRST, Hero or any of the similar programs that are once again growing nationwide. About 300 communities in California have joined CaliforniaFIRST, which began last year.